Defense battery procurement faces two statutory tests in sequence; passing one does not satisfy the other. FY2024 NDAA §154 bans batteries produced by six named Chinese entities, effective October 1, 2027. "Produced by" means the entity assembled the product or provided a majority of its components. Ninety-two days later, 10 U.S.C. §4865 (FY2026 NDAA §842) applies to new programs: non-FEOC final assembly, more than 95% of functional cell component costs from non-FEOC sources, and no FEOC-licensed technology.
§154 is a component-count test against six companies. §4865 is a cost-percentage test across all FEOCs, with a technology-license exclusion §154 lacks. A battery sourcing cathode from a non-listed FEOC clears §154 on the entity test and fails §4865 on cost. A cell built on FEOC-licensed chemistry with non-FEOC physical supply clears §154 and fails §4865 on the technology bar. DDP's framework already layers both: Phase II excludes §154-listed producers; Phase IV requires §842-compliant cells by August 2027. Neither test has published DFARS implementation language as of August 14.
§154 vs. §4865 at a glance
| §154 | §4865 | |
|---|---|---|
| Effective | Oct 1, 2027 (all procurement) | Jan 1, 2028 / 2029 / 2031 (phased by acquisition category) |
| Scope | 6 named entities + successors | All FEOC entities |
| Test | Entity assembled or provided majority of components | >95% non-FEOC functional-component cost + non-FEOC assembly + no FEOC tech license |
| Tech-license bar | No | Yes |
| Waiver authority | SecDef, unconditional | USD(A&S), conditions required |
| DFARS clause | Not published | Not published |
§154 named entities: CATL, BYD, Envision Energy, EVE Energy, Gotion High-tech, Hithium.
DFARS Case 2024-D011 (RIN 0750-AM08), intended to implement both provisions, remains at proposed-rule stage with no Federal Register action as of August 14.